What Should You Do When You Receive Notice to File a Claim in a Customer’s Bankruptcy?

B&BTake a moment for “Bits & Bytes” as Deanne Koll discusses what a lender should do when it receives notice to file a claim in a customer’s bankruptcy.

Disclaimer: This video is designed to be educational and informative, but it is not legal advice. Collection law is constantly evolving and subject to change. Each situation is unique, and each case should be addressed to fit the unique situation.

When a customer files Chapter 7 bankruptcy, sometimes an unsecured creditor will simply write off the loan and chalk the matter up to experience. However, if you receive a Notice to File a Claim, you will want to re-evaluate things.

When a debtor files for a Chapter 7 bankruptcy, more often than not, there will be no distributions in the case and any unsecured creditors will be wiped out, without any payment. However, there can be circumstances when a trustee locates some non-exempt assets and will sell them to distribute to unsecured creditors. It is in this instance that you will receive a Notice to File Claim.

If you receive such a notice, you should calendar the deadline on the notice and be sure to file your claim within the period granted. If you fail to file a claim, you have no ability to receive any of the proceeds from the trustee. If you do successfully file your claim, the trustee will pay you a pro rata share of the proceeds of the money he collects.

Thus, if you receive a Notice to File Claim in a customer’s bankruptcy, it would be wise to discuss the details of your claim with an attorney, so as to not miss an opportunity to receive some payment on your debt.

Related Attorneys

Related Services